Fair Practice Code

 

Version : 4.0

Prepared by : Compliance and Legal Department

Approved by : Board

Date of Approval : August 13, 2025

This document contains confidential information and remains the property of Arohan Financial Services Limited. This policy is intended to guide the risk management practices within the organization. It is not to be used for any other purposes, copied, distributed or transmitted in any form or means or carried outside the Company premises without the prior written consent of the Company.

 

Contents

 

Introduction

Arohan Financial Services Limited is a public limited company registered with the Reserve Bank of India (RBI) as an NBFC ND SI and has been reclassified as MFI effective January 10, 2014. It seeks to empower the underserved by offering a range of financial services, in a manner sustainable for all stakeholders. Arohan constantly endeavors to deliver quality service to its clients by maintaining highest levels of transparency and integrity.

Arohan is present across the low-income states across the central, east and north-east offering financial inclusion products to the underserved clients. In pursuing its mission, Arohan has been ensuring that principles of "responsible lending, transparency and ethical values" are followed in all its dealings with customers. In keeping with this philosophy, Arohan has drafted its Fair Practice Code (FPC). Arohan's FPC is also compliant with different guidelines issued as under:

Reserve Bank of India (RBI) updated the Fair Practices Code for NBFC-MFIs vide RBI master direction no. DNBR.PD.008/03.10.119/2016-17 dated September 01, 2016. It has been further updated vide Master Direction – Reserve Bank of India (Regulatory Framework for Microfinance Loans) Directions, 2022, dated March 14 2022 and by RBI Master Direction – Reserve Bank of India (Non-Banking Financial Company –Scale Based Regulation) Directions, 2023 dated October 19, 2023.

Industry Code of Conduct developed by MFIN (Microfinance Institutions Network) and Sa-Dhan.

Smart Campaign's global standards of Customer Protection Principles.

Objectives of the Policy

1. Develop a comprehensive Fair Practices Code (FPC) to adopt guidelines provided by regulator, Self-Regulatory Organization and global standards of customer protection principles and to comply both in letter and spirit.
2. Seven core values of Microfinance- Integrity, quality of service, transparency, fair practice, privacy of customer information, integrating social values into operations, and feedback and grievance redressal mechanism.
3. Code of Conduct that lays down additional requirements to enhance and improve industry practices. These include, Integrity and Ethical Behaviour, Transparency, Customer protection, Governance, Recruitment, Customer education, Data sharing, and Feedback/Grievance redressal mechanism.
4. Formulate operating guidelines for implementation of FPC in an effective manner.
5. Disseminate the policy guidelines in an effective manner to all stake holders in general and to the customers & employees of Arohan in particular.
6. Review & reinforcement mechanism to ensure high level of adherence to FPC.
7. Mechanism for continuous upgrading of FPC.

Arohan's FPC is structured along Smart Campaign's 6 Customer Protection Principles (CPP). These principles are as follows:

1. Principle 1: Appropriate Product Design and Delivery
2. Principle 2: Suitability
3. Principle 3: Transparency
4. Principle 4: Fair and Respectful Treatment of Customers
5. Principle 5: Privacy of Customer Data
6. Principle 6: Mechanism for Complaint Resolution

Under each section, we present various mechanisms instituted by Arohan to put in place a robust set of fair practices and procedures. Different forms and formats used (like Loan Application form set, and loan card cum loan agreement) have been designed to comply with RBI's FPC guidelines. Arohan's Branch office and premise, websites and other literature also comply with the disclosure requirements mentioned in this document. Refer the Annexure 2 for details.

Principle 1: Appropriate Product Design and Delivery

Product Design

1. Arohan has designed a wide range of loan products to match the business needs of its target customers. Further, to align its offerings to the needs of the customers, Arohan is committed to develop new products and refine the existing ones on a regular basis.
2. No collateral/deposit is collected from the customer.
3. Complete pre-closure of loan is allowed with no pre-closure charges.
4. Moratorium between loan disbursement and due date of repayment of first installment is between 7 to 59 days, and thus greater than the frequency of repayment. For monthly repayment mode moratorium is 30-59 days, but loans with weekly and fortnightly mode have moratorium is ranging between 7 days to 30 days.
5. All microfinance loans have a tenure ranging from 3 months to 36 months with multiple ticket sizes up to 1 lakh.
6. Arohan has put in place prudent measures to proactively prevent aggressive sales practices. Management, being cognizant of the risk of bundling products has put in place a policy whereby first-time customers can also avail voluntary products following the day of disbursement. The Internal audit also closely oversees the process to ensure that the products are not forced upon reluctant customers. The incentive paid to staff is contingent upon business sourced (with an upper cap) and portfolio quality while additional incentive is given to branches attaining a good audit grade.
7. Arohan has taken adequate steps to ensure that the procedure for application of loan is not cumbersome and loan disbursements are done as per pre-determined time structure.
8. All sanctioning of loans is done only at central location (center and branch) and more than one individual is involved in the function. Disbursements are done directly to their respective bank account.
9. Arohan has instituted a dedicated process to raise customers’ awareness of the options, choices and responsibilities vis-a-vis financial products and services available.
10. Arohan systematically assesses customer satisfaction and investigates reasons for customer drop out on a quarterly basis. Information is used to inform product development and improve existing products.

Principle 2: Suitability

1. Arohan conducts a proper due diligence as per the internal credit policy to assess the need and repayment capacity of the customer. Cash flow analysis is conducted for all loans, where business and family expenses, as well as liabilities from other sources are considered. This is augmented by a visit to customer’s house and/or business place.
2. Arohan will ensure that the loan commensurate with the borrower eligibility to pay and the borrower have sufficient repayment capacity to service the debts and is not an over burden to them.
   
   Policies and practices exist for training CSRs in assessment of repayment capacity.
3. Staff incentive is structured to reward the quality of portfolio at least as highly as growth.
4. The data on indebtedness of a particular region is taken as one of the parameters for choosing a new district, block or a service area. This is done with a view to avoid lending in areas with high degree of indebtedness.
5. Arohan will ensure that the loan repayment obligations (collateral-free microfinance loans as well as any other type of collateralized loans) of the household should not be more than 50 per cent of the monthly household income including both principal as well as interest component towards all existing loans as well as the loan under consideration.

Principle 3: Transparency

1. Arohan ensures that all communications to its customers are in the language understood by them.
2. Arohan will prominently display the minimum, maximum and average interest rates charged on microfinance loans in all its offices, in the literature (information booklets/ pamphlets) issued by it and details on its website.
3. Arohan’s loan agreement forms are in the vernacular, contain no fine print and are worded in simple language. In the loan agreement, the following information has been disclosed:
   1. KFS (Key facts statement) giving pricing of loans and its break up (involving only 3 components viz. the interest charge, the processing charge and the insurance premium)
   2. No penalty charged on delayed payment
   3. No security deposit/margin being collected from the borrower
   4. Moratorium between grant of loan and due date of repayment of the first instalment is between 7 to 59 days, and thus greater than the frequency of repayment. For monthly repayment mode moratorium is 30-59 days, but loans with weekly and fortnightly mode have moratorium is ranging between 7 days to 30 days.
   5. Arohan declares and takes explicit permission from the customers about sharing customer data to outside agencies, if needed, for research and analysis, without impairing the interests of the economically backward people.
   6. All other important terms and conditions.
4. All information required by customers before signing the loan agreement is accessible and staff is available to answer questions. Further, customers are given adequate time to review the terms and conditions of the product. Staff deploys both written and verbal methods to communicate various disclosures, including but not limited to the debt collections practices.
5. The loan card is in vernacular language and includes the following details:
   1. Effective Interest rate
   2. Simplified factsheet on pricing (as mandated by the Regulator)
   3. All other terms and conditions attached to the loan
   4. Information which adequately identifies the borrower
   5. Acknowledgements of all installments received and final discharge
   6. Loan card has a prominent mention of the grievance redressal system set up by Arohan and also the name and contact number of the nodal officer
   7. Non‐ credit products issued shall be with full consent of the borrowers and fee structure shall be communicated in the loan card.
6. Arohan has ensured full transparency in the maintenance of books of accounts and reporting/ presentation and disclosure of financial statements by qualified auditor(s). Arohan follows the Audit and Assurance Standards issued by the Institute of Chartered Accountants of India (ICAI).
7. Arohan's CSRs are trained on effective communication using multiple channels like brochures, meetings, and reading contracts out loud.
8. Prior to offering the customer any financial or non-financial product we will provide them all the relevant details (features, benefits, processing system, terms & condition, pricing including charges and effective interest rate including required documents) both before and during disbursement. Further consent of the customer is taken for all financial or non-financial product.
9. Arohan provides a valid receipt for each and every payment received from the customer.
10. Arohan ensures that any change in terms and conditions like change in interest rate, disbursement schedule, service charges, prepayment charges etc. are communicated in written to the borrower. Any change is applied only prospectively.

Principle 4: Fair and respectful treatment of Customers

1. Arohan is accountable for preventing inappropriate staff behavior and provide timely grievance redress to all its customers. Refer annexure 1 for more details on Arohan’s Feedback and grievance redressal mechanism.
2. Arohan has put in place a Code of Conduct that is approved by the Board with regard to field staff and systems for their recruitment, training and supervision. Penalties may be imposed on cases of non-compliance of field staff with the Code of Conduct.
   
   Customers also receive education on the code of conduct from the field team, through notice board posters, loan cards and the website. This information is also conveyed during the loan origination process.
3. Arohan’s induction and refresher trainings for field staff includes programs to:
   1. Inculcate appropriate behavior towards customers without adopting any abusive or coercive debt collection/recovery practices.
   2. Collection practices in the field to be adopted.
4. Arohan ensures that recoveries are made only at a centrally designated place (the centre). Only if the borrower fails to appear at a centrally designated place on 2 or more successive occasions, is the CSR allowed to make recoveries at the place of residence or work of the defaulting borrower. Further, they have been instructed not to visit customers at inappropriate occasions such as bereavement, sickness etc. to collect dues.
5. Arohan desists from resorting to undue harassment. Methods like persistently bothering the borrowers and/or calling the borrower before 9 am and after 6 pm and use of muscle power for recovery of loans are not deployed by Arohan.
6. Compensation methods for staff put more emphasis on service quality and borrower satisfaction than merely the number of loans mobilized and the rate of recovery. Managers and supervisors review ethical behavior, professional conduct and the quality of interaction with customers as part of staff performance evaluation.
7. Arohan has a) a detailed Board approved process for dealing with customers, at each stage of default; and b) a Board approved debt restructuring program for providing relief to borrowers facing repayment stress.
8. Arohan is committed to plough back a share of its profits for the benefit of the communities, it serves both as part of the CSR mandate and its overall social performance goals. Arohan has a detailed CSR policy to guide its activities in this regard.

Principle 5: Privacy of customer data

1. Arohan complies with KYC Guidelines of RBI and has a detailed KYC-AML policy.
2. Arohan also ensures that it keeps personal information of customers strictly confidential. It is disclosed to a third-party subject only if: a) permission has been obtained in writing from the customer about such disclosure and b) the party in question has been authorized by the customer to obtain customer information from Arohan. c) it is legally required to do so d) this practice is customary amongst financial institutions and available for a closed group on a reciprocal basis (such as a credit bureau).
3. A written privacy policy governs the gathering, processing, use and distribution of customer data. The policy covers current staff and those who leave the organization.
4. Arohan's IT systems have password protection systems with access rights clearly defined.

Principle 6: Mechanism for Complaint Resolution

1. Arohan's Board of Directors has laid down a grievance redressal mechanism (GRM) to resolve disputes. Refer annexure 1 for details.
2. A periodical review of the functioning of the GRM is undertaken at various levels of management. A consolidated report of such reviews is submitted to the Board every quarter.
3. A declaration that Arohan is accountable for timely grievance redressal has been made in the loan agreement and in the Fair Practice Code, displayed in the office/branch premises.
4. Arohan has designated one grievance redressal official to handle complaint, record their suggestions and make his/her contact numbers easily accessible to customers.
5. Office staff is trained to inform customers of a) their right to complain and b) how to submit a compliant (both verbally and in writing).
6. Arohan uses the information gathered from complaints to correct mistakes, omissions and activities that may be harmful to the customer.
7. Internal audit or other monitoring systems check that complaints are resolved satisfactorily.
   
   To ensure compliance with the directions set herewith, the responsibility for compliance has been assigned to the Central Operations department. Further, Arohan’s Internal Audit & Process Control department will bring FPC compliance under the ambit of its audit and inspections.
   
   Arohan further declares that it shall be accountable for inappropriate behaviour by its employees or employees of the outsourced agency and shall provide timely grievance redressal.

Annexure 1: Grievance Redressal Mechanism for Customers at Arohan

Introduction

Feedback and Grievance Redressal Mechanism, is one of the 6 core values of Microfinance as specified by Sa-Dhan and MFIN, and requires an MFI to provide for:

1. Formal and informal channels for feedback and suggestions from its customers
2. Assessing the impact of services in order to enhance competencies and serve customers better
3. Formal grievance redressal mechanism for customers.

Arohan’s Board of Directors has laid down a grievance redressal mechanism (GRM) to ensure that disputes arising out of the decisions of Arohan’s functionaries are heard and disposed of at least at the next higher level. The Board of Directors has also provided for periodical review of the compliance of the Fair Practices Code (FPC) and the functioning of the GRM at various levels of management. A summary of customer grievances will be submitted to the Board every quarter.

Channels for feedback and grievance redress

Following channels of addressing customer grievances have been set-up:

1. Customer Walk-in at branches/RO/ZO/HO
   Each customer is informed about the location of their Branch and the name of its Branch Head (BH), so that in case they wish to register a complaint in person, they can do so easily. The contact numbers of Customer Service Representative (CSR) and BH are also mentioned on the loan card cum loan agreement. Customer can walk-in at the branches any time and raise their complaint to the BH. BH will be bound to record the complaint in the Complaint Register. Complaint register is placed at the branch for customers to register their grievances.
2. Call-centre for Inbound calls
   Arohan has implemented a Customer Care Line to ensure that the queries and grievances of customers with the organization's operations or behavior of staff can be systematically routed and addressed. Customers who have concerns call or email our Customer Care Help Desk at: 1800 103 2375 and customercare@arohan.in between the hours of 10:00 am and 6:00 pm, from Monday to Friday. The Customer Care Help Desk will log the call and route it to relevant staff for resolution. The issue will be tagged for resolution as per complaint TAT. The toll-free number is printed on the loan cards and other related documents. The number is also displayed at the branch and company website.
3. Outbound Calls
   Arohan’s Customer Care cell will make outbound calls as per a pre-fixed schedule. The outbound calls will be made with one or more of the following objectives:
   1. Do a sample check to verify the extent of adherence to policies and process especially with regards to customer protection, for both credit and non-credit products
   2. Test specific issues that may arise from time to time. For instance, if cases of rude staff behavior are being reported from a certain area, randomized calls will be made to customers to test its veracity. In all these calls, certain generic inquiries around customer satisfaction and staff behavior are also made.
4. Informal feedback
   Besides the formal channel mentioned above, customers can submit their written or verbal enquiries / complaints to any Arohan staff (CSR, BH, AM/RH/ZBH or any HO staff) who meets them at any forum such as center meetings, CGTs, GRTs, ICC etc. These enquiries/complaints shall be forwarded to BH/ABH of the branch and who in turn will log the issue in Samadhan portal for resolution/action.
5. Customer Satisfaction Surveys
   Arohan will commission annual Loan Verification, Customer Satisfaction (C-SAT, Dropout, Overdue, Cross Sell and other need-based surveys) by independent agencies. All these surveys will consist of a brief survey questionnaire around feedback on products, processes, service quality, and staff behavior. The results will be shared with the Board.

Escalation Matrix

In case of any grievances arising due to the behavior of our employees and/or any other issues, customers may complain using the following channels:

Level 1: Customer Service Representative/Branch Head/Relationship Manager

Please contact Customer Service Representative/Branch Head at the branch or you can call them in the mobile numbers provided in the Center Attendance Register/Loan Card. Also, the complaint register is placed at the branch for customers to register their grievances.

Level 2: Customer Care Help Desk

If you are not satisfied with the response received at the branch level or if you don't receive any response from the branch in 3 working days, please call our Customer Care Help Desk to register your complaints:

Toll-Free Helpline Number: 1800 103 2375
Timings: 10:00 am - 6 pm (Monday to Friday)
WhatsApp Number: +91 76050 27711
E-mail ID: customercare@arohan.in

Level 3: Grievance Redressal Officer

If you are not satisfied with the response received from our Customer Care Help Desk or if you don’t receive any response from us as per Turn Around Time (TAT), please write to, please call or write to

Grievance Redressal Officer:
Mr. Bikash Kumar Gupta
Grievance Redressal Officer
Phone: 033-40427726
Mobile: +91-9903019085
Email: gro@arohan.in
Timings: 10 am – 6 pm, Monday to Friday

Arohan Financial Services Limited
PTI Building, 4th Floor,
DP block, DP-9, Sector-V, Salt Lake,
Kolkata-700091

We will respond within 10 days of the Grievance Redressal Officer receiving the complaint.

You can lodge a complaint or raise a concern, without mentioning your name and personal details (Anonymous). We assure you that due investigation will be made and appropriate action will be taken to resolve the concern.

If you are not satisfied with the response received from our Grievance Redressal Officer or if you don’t receive any response from Grievance Redressal Officer within 10 working days please call or write to our Principal Nodal Officer:

Mr. Anup Kumar Gupta
Principal Nodal Officer
Phone: 033-40156040
Email: anup.gupta@arohan.in
Timings: 10 am – 6 pm, Monday to Friday

We will respond within 5 working days of the Principal Nodal Officer receiving the complaint.

If you are not satisfied with the response received from any of the above or do not receive a response within 30 days, you may write to the RBI Ombudsman through any of the touch points mentioned below:

1. Online Compliant Management System at https://cms.rbi.org.in
2. Post to Centralized Receipt & Processing Centre (CRPC), Reserve Bank of India, 4th Floor, Sector 17, Chandigarh – 160017
3. Call CRPC toll-free helpline 14448 to know how to file a complaint and the status of a filed compliant.

Alternatively, you may appeal to the Officer-in-charge, Department of Supervision, Reserve Bank of India, 5th floor 15, Netaji Subhas Road, Kolkata – 700001, Tel.: 033-22312892.

MFIN Toll Free Number

you may also lodge complain to MFIN toll free helpline number 1800 102 1080

Arohan displays the call centre number and the details of escalation matrix prominently (in the vernacular) for the benefit of their customers, at all of its branches in the grievance redressal poster. The notice serves the purpose of highlighting to the customers, the grievance redressal mechanism followed by the company, together with details of the grievance redressal officer and of the Regional Office of the RBI.

Internal Processes

To ensure that the data and information gathered from various feedbacks and grievance channel is acted upon, Arohan has put into place following systems and processes:

1. Periodic review and update of Company's Fair Practice Code.
2. Including a module on Arohan's FPC in the induction and refresher trainings.
3. Set-up a Customer Care Cell at the Central Operations Unit, consisting of a team of Customer Care Executive and Manager Customer Insight, who has also been nominated as the GRO.
4. Monthly analysis and reporting of the data gathered from different channels-at branch (complaint register), and Customer Care Help Desk (inbound/outbound calls).
5. Integrating the customer satisfaction parameters in the staff's KPI.
6. At the time of CGT, customers are educated on FPC, grievance redressal mechanism and escalation matrix for their unresolved complaints.

The procedure for complaint resolution is as follows:

1. Complaint is generated via any one of the following sources - Complaint register, Calls (inbound/outbound), informal dialogue with customers during field visits.
2. Irrespective of the source, each complaint is tagged (syntax for tagging: date/branch code/customer ID) and assigned a severity level based on the nature of complaint (as per the Board approved Grievance Redressal Escalation Policy).
   1. For complaints generated at the branch, tagging is done by the branch team and subsequently the details are shared with the customer care cell via Samadhan portal.
   2. For complaints generated via inbound/outbound call, CC Executives do the tagging.
3. Customer Care Help Desk maintains a tracker for each complaint lodged.
4. Based on the level of severity, the complaint is forwarded to the concerned person for resolution by the Customer Care team.
5. Post lodging the complaint, Customer Care team follows up on complaint closure status.

Annexure 2: Syncing Arohan's documentation with RBI's Fair Practice Code

1. Loan Acknowledgment receipt:

1. Content is printed in vernacular language.
2. Contains all the necessary information to enable customer compare with other NBFCs and take an informed decision.
3. It Is use to record the borrower’s acceptance to the loan terms and conditions.

2. Loan Agreement

Arohan provides a loan card and loan agreement that is given to the customer at the time of sanction/disbursement and that stays with the customer. All entries in the loan card and loan agreement are in vernacular language.

The loan agreement complies with RBI’s FPC directives which carries the following:

1. A statement articulating Arohan's commitment to transparency and fair lending practices.
2. Loan agreement mentions that any change in T&Cs like change in interest rate, disbursement schedule, service charges, prepayment charges etc. will communicated in written to the borrower, and that the change is applied only prospectively.
3. Key Facts Statement.

3. Loan Card

The Loan card carries the following

1. Effective rate of interest
2. Pricing of loan involving all components.
3. No penalty charged on delayed payment.
4. T&C attached to loan
5. Customer identifiers
6. Acknowledgement of all repayments including installments received and the final discharge.
7. Grievance redressal system set up by Arohan and the name and contact number of the nodal officer.
8. Carries a declaration that Arohan will be accountable for preventing inappropriate staff behavior and timely grievance redressal.
9. No Security Deposit / Margin is being collected.
10. That the borrower cannot be a member of more than one JLG.
11. Moratorium between the grant of loan and the due date of the repayment of the first installment.
12. Assurance that the privacy of borrower data will be respected.

4. Branch office and premise

1. FPC is displayed prominently.
2. A statement articulating Arohan’s commitment to transparency and fair lending practices is displayed.
3. The effective rate of interest charged is displayed.
4. Declaration that Arohan will be accountable for preventing inappropriate staff behaviour and timely grievance redressal. Further, CGRM and RBI Nodal officer details are prominently displayed.

5. Website & other literature

1. The effective rate of interest charged and the GRM set up by the NBFC-MFI is mentioned.